I am currently in Florida, in a closing debacle with Suntrust Mortgage and want to cash out our savings and just close the home purchase and be done with the process, then try to recoup funds through some type of refi or home equity product. I have been informed by our realtor of this Delayed Financing Rule and ran across your article stating it has been lifted.
Can you help me confirm whether or not the Delayed Financing rule is in effect for my situation?
We are not investors, just people purchasing a $169,000 home. We were putting $83K down and doing conventional financing of roughly $92K.
The Delayed Finance Rule is offered through Fannie Mae only and only applies to a property that was acquired with all cash. The property needs to be free and clear of any liens or encumbrances and there cannot be a security interest in the property after the acquisition by any other third-party. The delayed financing rule, allows a homeowner, whether it be a primary residence, second home or even investment property to re-mortgage up to 70% of the purchase price or appraised value whichever is lower. Yes you will need to order a whole new appraisal and the lender will use whichever is lower purchase price or appraised value for the purposes of doing a cash out refinance immediately post closing.
Some requirements of the delayed financing rule for remortgaging your property
- Any gift money that was used for the acquisition of the house, cannot be paid back to the giftor using the delayed financing mortgage loan program
- All funds used to acquire the property by other investors will go back to the primary homeowner and the primary homeowner will need to show those monies were notes due and payable.
- Additionally, if any other funds from any other parties were used for the acquisition of the property, there needs to be clear and concise paper trails from where those monies originated and where those monies ended up which involves providing bank statements to show withdrawals and deposits of such monies.
2 more Important consumer mortgage tips regarding cost and interest-rate using this type of financing
1. Pricing adjustment for cash out
2. Pricing adjustment for delayed financing rule
In other words, due to the inherent risk based pricing associated with this type of mortgage program, you will pay a higher interest rate in such a scenario than if you were to wait the six months. The pricing might be an .125 to .25% worst in interest-rate.